Arsteca.net

Why Destiny is Bad For Syracuse

Total public subsidies will outweigh any possible benefits.

Jun 18, 2003

I respectfully take issue with Minch Lewis' Post-Standard comment (6/15).
Lewis suggests, in essence, that despite all the tax breaks and other
benefits the Destiny project will receive from taxpayers, there will be no
net loss of tax revenue from where things stand today; increased sales tax
revenue will make up the difference. But it is not enough for the city to
break even or hope to increase its revenue slightly from such a huge
development. Lewis fails to point out the additional costs the city will
incur, such as police, fire, and road maintenance, as a result of Destiny.
What about schooling for children of new workers coming to fill new jobs?
There is no reason to assume that city expenses will grow more slowly than
the growth of the city itself. Destiny must pay it's taxes, or the rest of
us will incur the burden.

Moreover, one must not forget the opportunity loss, namely, the
development and tax revenue opportunities we forego by accepting the Destiny
deal. The land around Carousel mall--now that it has been cleaned, consolidated,
and rezoned--is very desirable prime real estate. Others will offer to develop
it if Pyramid decides it is incapable of doing so without prodigious
government subsidies.

Trade unions and contractors are lobbying for the project to go forward
because of the employment the project will generate. Just remember that
these construction jobs are not dependent specifically on the current
Destiny project and funding arrangement; they are dependent on construction
occurring. That construction is guaranteed by virtue of the desirability
of the property.

Lewis fails to point out the opportunity cost of the current tax proposal
over a no tax break proposal. Syracuse property owners typically pay close to
4% in property tax. At that rate, the 2.2 billion Destiny USA would owe the city
$88 million per year. The projected $20 million per year in additional
city sales tax revenue would be in addition to that amount. The existing mall
would owe roughly $20 million per year today, if the current tax deal were
dissolved.

Lewis states, "The proper role of government in Destiny USA is to provide
incentives but not to provide public funds". However, Pyramid's payment in
lieu of taxes is, in essence, a tax which will be spent exclusively to benefit
Pyramid's Destiny property. For you and me, it's like getting your
property tax refunded as long as you agree to spend it all on maintaining or
upgrading your property: paint your house, add some landscaping, repave
the driveway, etc..

On top of this, Pyramid has obtained New York State Empire Zone status for
Destiny. Among other benefits, such as significant employee tax credits
for Destiny tenants, the state will refund Pyramid for its Destiny property
tax, up to $52 million per year, for more than 10 years. That is very
strange, considering Pyramid will not be paying property taxes,
officially. The two deals together are akin to having your cake, eating it
too, and getting a second one free.

What is the total value of government tax breaks, grants, and other
benefits to Pyramid? The $88 million per year tax break for 30 years
totals $2.64 billion; the $52 million per year state Empire Zone payments
for 10 years, $520 million, plus additional diminishing payments for 5 years,
roughly $100 million, total $620 million. Without delving any deeper,
Pyramid will receive $3.26 billion over 30 years in government subsidies.
That is more than the total cost of the project. Lewis argues that each
incentive given for Destiny are performance based, "In every case the
incentive is funded by the project". That is not altogether true: less
than half the planned project must be built for Pyramid to receive all the
benefits; and nowhere is it written that the benefit to the city must
match or surpass the city's additional expenses.

Everybody agrees that the old oil city should be developed. But the Destiny
project is a very bad deal for the city if the tax agreement remains as it is.

Carlo Moneti
Syracuse, NY

Note: This letter was sent to the whole NYS legislature and to the Post-Standard, which published only 1/3 of it, greatly undermining it.